Ecological Economics
Natural Resource
-anything with potential use in creating wealth or giving satisfaction.
Renewable vs. Nonrenewable Resources
Nonrenewable resource
-resources that cannot be replaced (in a human time scale) because they take long periods of time to generate by earth's geological development or they are finite: the minerals, fossil fuels and metals.
-present supplies are becoming exhausted by human standards and will be gone.. soon. Yikes!
Renewable Resources
-things that can be replenished or replaced (usually refers to energy resources) such as sunlight, biological organisms, fresh water, fresh air, wind, and used cooking oil!!!
-but if we rip apart habitats we disrupt self renewing biological cycles. Yikes!
*Tragedy of the Commons*
-Article written in 1968 by biologist Garret Hardin.
-resources are being destroyed or degraded because people care more about the interest of
themselves than they do about public interests. People who use or destroy more than their fair share
of common property.
-Hardin described an open access system- no rules to manage resource use. (ex. Native American
management of rice beds and hunting grounds, Maine lobster fisheries)
-communal resource management systems- resources managed by a community for long-term sustainability- can work IF collectively enforced and community anticipates continually living on the land which will be then be passed onto their children.
Classical Economics
The theory is built on the idea that a free capitalistic market is the best method to govern our financial well-being... maybe.
Law of Supply and Demand. As supply (how much product is available) increases its demand (the amount of product the consumers will buy) decreases and the price of the good also decreases. As supply decreases, the demand increases and its price increases. Kind of like a school dance when too many students of the same sex show up.
Market equilibrium is when the demand for a good equals its supply. Supply and demand are inversely proportionate.
GNP- Gross National Product. A nations' wealth is measured by the sum total of all the goods and services it provides.
GDP- Gross Domestic Product. The amount of goods and services produced only within its national boundaries within a year.
Natural Resource Management
Cost Benefit Analysis (CBA)
-This concept is used to evaluate the pollution prevention with the costs and social benefits of a
project. It assigns values to resources and evaluates whether the pollution cost of a project is "worth" the social benefits. Legislators use this process to determine whether a given undertaking is a "good idea"
by how cost efficient it is and what benefits it will create as well as how much pollution there
will be. This can be looked at as a way for businesses to assign values to natural resources and hopefully a way to mitigate the extent of environmental damage done by any project before it is undertaken.
Often the true cost of using environmental resources are "externalized" meaning the price of permanently distroying nature and polluting our air, water and soils are not taken into consideration when goods are valued on the market. Note with neither of the above calculations are the natural resources (biodiversity, fresh air), human capital (fair wages) or social capital (indigenous societies) taken into consideration.
Marginal Costs
Fixed costs- the costs paid to make a product or provide a service that does not change as production increases. For instance, the mortagage on a property.
Variable costs- costs that increase as the number of products produced increases, such as for raw materials to manufacture a product.
Marginal costs- the cost of making one additional unit of product or service. The total cost per item when one more item is produced. The marginal cost increases as more units are produced, but as more products are made the cost goes down for the consumer.
Margin of diminishing returns- additional benefits gained by the buyer by procuring one more unit of product or service. ex. eating TWO bowls of ice cream or having two oil changes back to back. What is the added value of having that second helping or service?
Internal Costs- immediate costs that are experienced to manufacture a product.
External Costs- costs to people or society that are not experienced by the company and are NOT passed down on to the consumer directly. External costs are felt by someone but NOT those that turn the resources into a profit or those that establish the price of the product. Ligitation is one way to INTERNALIZE the external costs. ex. Erin Brockovich. So are laws and taxes. ex. Surface mining control and reclamation act (SMCRA) and cigarette taxes.
To internalize external costs means that the consumer is paying for the full cost of the product or the TRUE Cost. Also called the full-cost analysis or true-cost pricing.
Technological Developments
Pollution Tax
-This is used to ensure more environmental protection concerns in national or local economies. Taxes
are paid per unit of effluent.
Businesses are taxed which creates an incentive for these industries to find more ecological ways to
deal with their pollution.
Green Business
-businesses are starting to realize that businesses cannot be sustainable over a long time period.
-new approach to business to how we can achieve both environmental protection and social welfare.
-promotes eco-efficiency, clean production pollution prevention, industrial ecology, natural
capitalism, restorative technology, and environmentally preferable products.
Green Consumers
-includes: the Body Shop, Patagonia, Aveda, Malden Mills, Johnson and Johnson and Interface, Inc.
